Tuesday, April 6, 2010

Terminology Tuesday - Mobile Home Dealer (aka Retailer)

(Note: I think it's important to know the terminology and words used when learning any new business including mobile home investing. I came up with 'Terminology Tuesday' as a way to go over the terminology used in the mobile home business. It's important to know the terminology when talking to people in the business so you're all on the same page).

As defined in Wikipedia:

"Retailing consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain."

Retail Pricing

"The pricing technique used by most retailers is cost-plus pricing. This involves adding a markup amount (or percentage) to the retailer's cost. Another common technique is suggested retail pricing. This simply involves charging the amount suggested by the manufacturer and usually printed on the product by the manufacturer."

Definition Link

Basically, mobile home dealers (aka retailers) are in the business to make a profit. They buy a product at a lower cost than their retail (aka sales) price.

The majority of the big mobile home dealers (aka Clayton, Palm Harbor, etc) are in the business of selling new mobile homes. This is what they do. Their product is mainly selling new mobile homes they manufacture and sell retail to end buyers. This is their primary market.

Now, do mobile home dealers sell used mobile homes? (aka repo homes, homes on trade in). Yes, they do. Though, in most cases they try to sell these homes fast and most times at a lower cost than their new ones in order to make room on their lots and/or to make another deal go through.

Mobile home dealers are good people to have on your team. When I first started out, I visited a lot of mobile home dealers in the area (apart from the parks).

Just by visiting them, I learned a lot about the retail market in my area for mobile homes. Furthermore, a lot of these mobile home dealers are sales people - they primarily make a living by selling on commission. If they've got a deal going with a retail buyer, they're going to do whatever they can to make the deal work.

What does this mean for the mobile home investor? This means opportunity.

A lot of times, the types of buyers mobile home dealers are working with are those that are in the market for new homes.

Many times these buyers are familiar mobile homes and usually are living in a mobile home (unless they are first time homebuyers), which they need to sell to buy their new one. This then leads becomes an opportunity for a mobile home investor as a source to find sellers who are looking to sell their existing mobile home.

Sometimes these homes will be on land, sometimes they will be in parks. The key to success in this business is being able to develop the relationships to find these opportunities and be at the right place at the right time.

When I first started out, I made it a habit to stay in contact with the mobile home dealers that I visited. Every month or so, I'd pay them a visit and/or make a call just to touch base and see to see what's going on.

Now, I do admit networking takes time. And, developing the skills to becoming a good networker takes even more time. Though, the time taken to learn these skills and to be an effective networker does pay off in the end.

Even if your networking efforts do not yield many deals in the beginning, the important thing is to be able to develop the relationship so that when an opportunity does come up you are the first person they call. This is very important.

(Note: If you're looking for a great book on marketing, I highly recommend this one - I follow the principles outlined in this book to the "t" which has been a major contributor to my successs in this business).

A lot of times, I'll get calls from dealers I talk with on a regular basis.

Sometimes they are calling because they are working with sellers who are needing to sell their existing home to buy a new one. Sometimes they are calling because they are working with buyers who cannot obtain financing for their homes but are still looking for a home to buy. Sometimes they are calling me asking whether I know anyone in the market looking to buy a new home.

Either way, the important thing is that they are calling. When an opportunity arises, you want to be the one in their minds to call.

If you're first in their minds, then you will be able to see opportunities that others cannot. And, this will lead to deals which will eventually lead to success.

Happy investing!

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